Alternative ways of paying for global public goods

Abstract

AbstractThe paper considers various possible means, mooted as alternatives or supplements to a simple schedule of governmental contributions, of paying for global public goods and common purposes: use of IMF Special Drawing Rights (SDRs); the United Kingdom's International Finance Facility (IFF); globally coordinated taxes (on arms exports, deep‐ocean mineral rents, international air transport, greenhouse‐gas emissions, or currency transactions) and the tapping of private fortunes. There is discussion of whether the various possible methods might have political advantages over a schedule of governmental contributions; of their revenue possibilities and of equity considerations. Promising, the paper argues, provided what are essentially prejudices can eventually be overcome, are first a global tax on currency transactions, and second the regular issue of SDRs, with those that would according to the allocation formula go to the rich countries recycled for development purposes. There is more doubt about the IFF, even if it were to receive sufficient support from the donor countries. It would probably need to be modified if it were to have much chance of being both workable and acceptable. Private fortunes on the face of it offer a huge potential; attention needs to be given to providing the right incentives; and it may be that they can be increasingly tapped for international development with the help of the new ‘global funds’. Copyright © 2004 John Wiley & Sons, Ltd.